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Please send news and comments to: gene@weiner-intl.com       

September 2014

We suspect that there will be some Apple supply chain shifts to meet its new product demands, fix the reported issues of the recent roll-outs (e.g., bending of iPhones in back pockets), need for protective sapphire glass on the new "large screen" devices, and new antenna designs (and construction methods). Samsung will apply continued Android market pressure in China with its devices that have new touch and proximity features. Chinese producers are gaining ground as well... and then there are the "new" Windows products. Margins for all are bound to shrink as competition heats up.

Intel's commitment of $1.5 billion for a 20% minority stake of a holding company in the Tsingua Unigroup which will own China's Spreadtrum Communications and RDA Microelectronics is an interesting move to establish a strong future position in the China (and global) mobile marketplace. Both of these companies are leading fabless IC companies in China that develop mobile chipsets for smart phones and other wireless consumer electronics products. Spreadtrum expects to jointly develop and sell a line of Intel Architecture-based SoCs with initial products available by the second half of 2015.

No surprises here

The world market for PCBs declined an estimated 2.2 percent in real terms in 2013 to an estimated $59.4 billion according to IPC’s World PCB Production Report for the Year 2013.   In the U.S. PCB bookings dropped 4.5% in August 2014 from August 2013's level. We wonder how much of this was market shrinkage in parts, how much was due to price squeezes, how much was replaced by new or different packages, and how much was just a drop in demand for equipment using the formerly produced PWBs. 

If successful, TTM's announced intention to gobble up Viasystems by early 2015 is sure to generate further board making consolidations and job losses. In our opinion, the about-to-be new #2 board-maker in the world with sales of over $2.5 billion will have to rationalize its new combined total of 16 sites in the U.S. where TTM is running at only 60% of capacity in order to "benefit" from the acquisition. There are about 30,000 workers in the 28 sites of the two entities in the U.S. and China.


The IPC TechSummit will be held in Raleigh, NC October 28-30. It will include:
     CALCE Annual Tin Whiskers Symposium
     Electronic System Technologies Conference (2nd annual)
     EMS Management Council Meeting 

It is not too late!

We believe that the passing of the RAMI (Revitalize American Manufacturing and Innovation) ACT by the U.S. House of Representatives is a critical step for America's economic recovery. It is designed to preserve and recapture jobs. However, it is only a first step. We were hoping that it would be passed by the Senate before the next recess or election, and not just "buried" as hundreds of House bills have been during the past few years. But, hope springs eternal while progress and action do not. Congress just started a 7 week recess. Maybe the government and industry will get behind the RAMI ACT and take action when they return without waiting for the newly elected members of the Senate to be sworn in! That's probably just a "pipe dream".

Perhaps we should follow the model of ITRI/ERSO in Taiwan. That seems to have worked well for decades.

On this note, it will be interesting to see what will be presented by 35 European "start-ups" representing the entire supply chain from materials to electronic systems and services in the Innovation Village at SEMICON Europa to be held 7-9 October in Grenoble.

What does survival flexibility require today?

An "adaptive supply chain" if you follow Thompson's recently announced changes of Fairchild Semiconductor's closing of 5-inch and reduction of 6-inch manufacturing lines while focusing more on its 8-inch operations in various parts of the world.

Taiwan's exports rose to $28.1 billion last month, a three-year high. Record sales of electronic components (e.g., chips from TSMC) for the impending release of the iPhone 6 and other portable devices were credited for the large increase. 

August 2014

End of summer - end of an era? Which is the way forward? New or renew???

NEPCON South China in Shenzhen, China August 26-28 was "OK" in terms of attendance- lots of prospects/"tire kickers" but very few buyers. Finland’s JOT Automation signed a 3-year distribution agreement at the show with WKK Distribution. WKK Distribution will act as a lead distributor of JOT Automation products for Asia-Pacific. The partnership will focus on JOT Odd Shape Assembly Cell, JOT Router, JOT Tiny Test Handler, JOT G3 Final Tester, JOT M10 Functional Test Solution, JOT IDeA, JOT Vision Inspection Cell and material handling products.

Japan's high-tech PWB volume in June increased  8.6% over that of June 2013, but revenue declined 4.1% for domestic build-up types of multilayers -  a typical sign of declining business, a maturing industry, cheaper foreign sources, and overcapacity. According to DKN Research, prices for these types of circuits used in cellular phones dropped 12% in Japan during the past year.

Japan manufacturers are also engaged in a price war with Taiwanese and Chinese competitors with double-sided and multilayer flexible circuits. Selling prices on these dropped more than 33% in the past year. Overall, forecast for the Japanese circuit industry for 2014 is NOT better than 2013's, which was the worst since 2008.

The world's top 100 printed circuit makers account for approximately 80% of global demand.

Nothing is forever. The interconnect industry (PCB and PCBA) has had a good run and matured. It has progressed technically, shifted geographically, consolidated, thrived and suffered due to geopolitical shifts as well as technical advances. Some well-known domestic companies are undergoing inversions. Others are shrinking or struggling to regain a profitable (albeit smaller) status after squeezing suppliers, inventories and eliminating much of the R&D funding for future improvements. Renewing appears to be more difficult as competition for "more of the same" continues to increase and value differentiation declines. In fact, some of the cost reduction activities have actually removed value from many of the offerings making them less attractive in the long run.

Change is inevitable! We can contribute to it or be the "victims" of it. We can invest in the future or have no future. We believe that today's survivors that are experiencing declining options for their current offerings must seek out new directions, new alliances, new wares, new  cooperative development activities and support for the future.

Opportunities do exist! *3D packaging has stalled due to both economic and technology issues. Mitsubishi Heavy Industry has started a new room temperature wafer bonding service for MEMs and biosensors for firms designing 3D packages and are unable to make them themselves. 2.5D appears to not be faring much better. New improvements in packaging appear to be filling some of the current needs and gaps. We can extend product life cycles with product/process improvements while developing new disruptive or not-in-kind technologies.

*NOTE: Remarks on packaging on  by Vern Solberg, Solberg Technical Consulting, on "Comments & Discussion" page.

New flexible substrates with 14 micron thin cores and 9 micron Cu surfaces provide the reality of 25 micron line and space volume production and, along with new technologies, the opportunity of PCB and IC substrate makers, and their supply chains to work more closely with the packaging industry.

Future success will require a total reassessment of your company's core values, mission statement and goals. It takes a new strategy and action plan. It will require you to question your managements' styles. Procedures will have to be reviewed, too. Why were these established? Are they still needed? Should they be modified to meet today's LEAN manufacturing needs and technology requirements? Do they support speed to market? Should you change or create new areas of focus? Do all your managers feel the urgency?

What are YOU doing to ensure YOUR future?

New cooperative activity

The newly established liaison between the IPC and the International Electrotechnical Commission's (IEC's) Standardization Management Board (SMB) should be a boon for the rapidly growing printed electronics industry. All concerned parties have something to contribute and something to gain from this collaboration to create international standards. One must, however, keep an open mind for new potentially disruptive technologies that could potentially bridge some applications of the areas encompassed by printed electronics, printed circuits, and other packages.

It's time to get serious

The Taiwan Printed Circuit Association (TPCA) has asked for government support to help Taiwan's PCB industry develop next-generation products to counter slowing growth rates. The nation's industry (including output from its factories in Mainland China) will generate sales of $18.3+ billion this year. The TPCA is likely to receive a good audience from the government as the nation's Vice President has been a keynote speaker at the annual TPCA show's opening ceremony the past few years.

Shortly after announcing a new $30 million share repurchase program this month Plexus held an opening ceremony for its $40 million 265,000 square foot manufacturing facility in Guadalajara, Mexico. The company has stated that it is now actively recruiting to fill employment opportunities. Full employment at this facility is expected to exceed 700 workers.

The increasing costs in China and elsewhere, the stability and availability of a skilled and semi-skilled work force, locally established supply chains, and the proximity of 5 universities are all sure to have contributed to the decision.

SEMI announced another positive book-to-bill IC equipment order ratio for the month of July.

Where will the equipment go? What types of chips with what nodes will it build? What industries will consume the added production? When will the PCB/packaging industries partake in the results?

Who is building the packaging substrates and where are they built?

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, yesterday said its revenue hit a record high $2.16 billion last month up 7.6% from June and 24.6% higher than a year earlier. The company also forecast a sequential revenue increase next quarter because of its strength in 28 nanometer and 20 nanometer process technologies as well as strong demand for flat panel IC drivers and tablet power management chips.
United Microelectronics Corp. (UMC), Taiwan’s second-largest contract chipmaker, posted its lowest revenue in three months last month, down 7% to $380 million due to less contribution from its solar business.

Conversations with several major circuit interconnect and packaging supply chain members in Singapore, Hong Kong, China and Japan indicate that business is "spotty" at best. KCE in Thailand is having record sales participating in circuits for the automotive after market. Thailand was said to now be the 2nd biggest source in Asia, after China, for that market segment. However, one of the world's leading market trackers informed us that our information was wrong and that Japan was second with an automotive PCB production 35% greater than Thailand's in 2013.

Unimicron Technology's Q2 2014 net profits were back up 377% from the previous quarter to $9 million. Gold Circuit Electronics and MFLEX are still working to restore profitability. Viasystems lost money the 2nd quarter of the year. The 2nd half of 2014 looks promising for Taiwan-based circuit makers. Global has restored its Lone Star name with a statement that it will only provide domestically produced circuits.

SEMI has forecasted double digit growth for equipment makers for the next two years. What will the applications be? Will Intel's new 14nm node be part of the surge - or will the cost/benefit ratio not be good enough? How much of an effect will "wearable electronics" have?Which substrate/board builders will benefit? When? Where?

Samsung's smartphone market position in China has been supplanted by Xiaomi  and in India by "home-grown" Micromax in the 2nd quarter of 2014. The latter is offering a 6-inch screen with magnetic flip cover, 1.3 GHz dual-core Media Tek processor, and an Android 4.2.2 Jelly Bean operating system with a 5-megapixel camera and a 6-month movie subscription for $140 (8,500 rupees)!

How is YOUR crystal ball?

Are you monitoring and re-evaluating your attainable markets and shares? Are you redefining your businesses? have you found creative ways of extending product life cycles? Are you noting major shifts in supply chains and aligning your companies with the king (or prince) makers of the next few years? Are you redefining your markets and stepping "outside" the traditional boxes? If not, I suggest re-reading "Blue Ocean Strategy" by W. Chan Kim and Renée Mauborgne (2005, Harvard Business School Publishing Corporation).

As a supporting organization of the China Sourcing Fair Fall 2014, Electronics & Components to be held on October 11-14, 2014 at AsiaWorld-Expo, at the Hong Kong Airport, the HKPCA is offering its members VIP Buyers'* privileges to this Fair.  These include:
- Free admission to the Fair;
- Free transportation arrangements to the Fairs;
- Coupons for F&B & shopping discounts at the Hong Kong International Airport area and AsiaWorld-Expo;
Exclusive use of onsite office suites to its invited VIP buyers (Wifi connection, office equipment, etc);
- A free Octopus Cash Card with HK$150 stored-value for transportation or purchases.


Masamitsu "Matt" Aoki has updated his detailed charts of "Build-Up Types of Printed Wiring Boards and Their Applications in Japan" (Version 14.1) and "Thin Types of Printed Wiring Boards and Their Applications in Japan" (Version 24.1). They are both now current through June 2014.

Write to us at gene@weiner-intl.com if you wish a copy.

Link to new EMSNow video interview by Philip Stoten at IPC PCB EXPO 2014 (9 minutes):  https://www.youtube.com/watch?v=IVOPMgbZ6kA